A country texting away

The heavy texting trend continues among Pakistans mobile telephony users. As per the Pakistan Telecommunication Authoritys latest Sms Report, a record, 237.5 billion Sms were generated between January and December 2011, by a subscription base of about 113 million.

With 175 Sms per subscriber per month in CY11, Pakistan easily beat other heavy-texting nations like China and India on this telecom metric, according to Portio Research, a UK-based telecom research company. As the number of unique subscriptions is between 70-80 percent, average Sms sent per subscriber is actually higher than 175 per month.

Sources maintain that the tremendous, 35 percent YoY growth in Sms count during CY11 is due to the heavy Sms usage among the youth segment. The top two operators in terms of Sms market share (Telenor and Mobilink) both have dedicated youth segment brands, which focus specifically on data services like Sms bundles, MMS, mobile internet and other value-added services.

PTAs Sms report shows that the revenues from these Sms messages provide a lucrative stream for the five mobile network operators who collectively bagged twelve billion rupees in CY11 - thanks to the sheer volume of Sms sent. The person-to-person (P2P) Sms provided about 90 percent of these revenues, followed by application to person (A2P) and person-to-application (P2A) Sms at 7.4 percent, and the multimedia messages (MMS) at 2.8 percent of the revenues.

The P2P Sms traffic is interesting to look at. Telenor led the market with 62.7 billion Sms in CY11, followed closely by Mobilink with 62.6 billion Sms. Ufones subscribers sent 57.8 billion Sms, Zongs 27.9 billion, and Warids 25.7 billion. However, Ufone users seem to be the most text-savvy, with their average daily Sms figure standing tall at 7.5 Sms, followed by Telenors at 6.2 and Zongs at 5.6.

While the flat rates for P2P Sms had declined to an average of Rs.0.59 in CY11, the reason for the robust YoY growth in Sms traffic is the market adoption of undled Sms packages, which are now offered by all the MNOs. PTA estimates that the operators derived an average of around 80 percent of their Sms traffic from bundled packages.

However, the operator-wise Sms traffic due to bundled packages varies. For instance, both Mobilink and Telenor carried an impressive 97 percent of their Sms traffics that originated from bundled packages in CY11, with their flat-rate Sms traffic being the remaining 3 percent. However, Sms packages provided 85 percent of Sms traffic for Ufone, 65 percent for Zong, and only 35 percent for Warid.

Meanwhile, the international Sms - which are expensive and have no bundled packages on offer yet - aggregated to 430 million during CY11, showing a YoY growth of 12.5 percent. Ufone again led here with 200 million Sms, followed by Mobilink (over 100 million) and Telenor (nearly 50 million).

However, international Sms traffic is likely to decline in the future, due to the growing usage of over-the-top (OTT), IP-based, cross-mobile messaging platforms like WhatsApp, Viber and leading social media messengers, which a growing number of Smartphone users in Pakistan have installed on their devices.

The report discusses at some length the future impact of such OTT messaging services on domestic Sms market. There is indeed a strong likelihood that the paid Sms service by the MNOs will face the heat from the free, global messaging services, eventually leading to decline in domestic Sms traffic some years in the future.

It will, however, be interesting to see how the Pakistani MNOs cope with this challenge. But, a takeover of the domestic Sms traffic by the cross-mobile messaging platforms and social media messengers seems unlikely for two reasons. First, mobile subscribers may get used to employing different messaging platforms based on factors like situation, task, location, and service availability.

And secondly, the OTT service providers will, after building a loyal subscription base, have to eventually migrate to paid subscriptions, which will somewhat limit the cost differentiation factor. WhatsApp is a case in point, which has already announced that it will charge $0.99 for a years use of its messaging platform, starting from April 2014 as per latest update. Other providers are expected to follow suit.